US trade deficit widens, reaching highest level since April 2023

WEB DESK: The latest data released by the US government on Thursday reveals a notable expansion in the country’s trade deficit for February, surpassing analysts’ projections and hitting its highest mark since April 2023.

According to the Commerce Department, the overall trade gap widened to $68.9 billion, marking a $1.3 billion increase from the previous month.

Contrary to market expectations of a slight decrease, the deficit grew, fueled by a $7.1 billion surge in imports compared to a modest $5.8 billion uptick in exports.

The rise in imports was particularly notable in consumer goods such as cell phones, household items, and food products, while exports saw significant boosts in civilian aircraft and crude oil shipments.

Rubeela Farooqi, chief US economist at High Frequency Economics, highlighted that the quarter-to-date deficit stands at $86.5 billion, slightly higher than the previous quarter’s $84.4 billion, indicating a potential drag on growth in the first quarter.

Looking ahead, Farooqi predicts a moderation in trade flows due to expectations of slower global demand and growth.

Notably, the US trade deficit with China decreased to $21.9 billion, although it remains the largest deficit with any single country. Conversely, the deficit with Mexico surged to $15.3 billion.

Treasury Secretary Janet Yellen, currently on her second visit to China in less than a year, is expected to address concerns about overcapacity in specific sectors, influenced by Chinese subsidies.

Yellen emphasised these concerns, stating, “We’re concerned about the spillovers that Chinese subsidies to these industries are having on the United States and other countries as well,” during a press briefing on Wednesday.

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